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Abuse of e-Filing Numbers: A New Frontier for Tax Fraud

You’d think that by now Florida has seen every kind of scam, hustle, and fraud the human mind can conceive. When I talk about federal regulators keeping their watchful eyes trained on Sunshine State healthcare providers, for example, it’s safe to say they’re not doing it solely because the weather is so inviting and the Cuban coffee is so robust.

Well, a recent Miami Herald article has brought to light a new form of tax fraud, a federal crime which has already reached epidemic proportions in South Florida and elsewhere. Have you ever heard of an “electronic filing identification number,” or EFIN for short? Well, based on current trends, you may soon be hearing the term quite frequently—often on the evening news, and possibly involving people walking out of jail in handcuffs.

What Is An EFIN? How Are They Misused?

An EFIN is a processing number issued by the Internal Revenue Service to legitimate electronic tax preparers, such as Certified Public Accountants and storefront tax services. It’s considered essential for preparing digital tax filings. The problem, as the Herald’s Jay Weaver illustrates, is that the IRS is not very selective as to whom they issue EFINs to; the agency has no specific training or criteria for recipients. Other than convicted felons, virtually anyone can receive an EFIN upon request.

In the wrong hands, an EFIN can be used to submit multiple bogus tax refund claims without using an electronic W-2 income-tax form, or needing the personal identification numbers (PINs) that are required of individual electronic filers. A corrupt individual with an EFIN and a minimum of stolen identity information (which we know is all too available in South Florida) can order and obtain thousands of prepared debit cards from financial service companies, purportedly to load tax refunds for “clients.” These cards can now be used to withdraw cash from ATMs nationwide without the user ever having to produce identification; thus, no bank accounts, checks or transfers are ever needed. Combined with other types of tax refund fraud, this practice has cost the IRS over $5 billion a year in losses nationwide.

Josue Pierre is one individual who managed to dip his hands into some of that crooked cash flow. In a two-year period, he scammed the IRS for about $700,000 in fraudulent refunds, enough to lease a condo at a Brickell-area high-rise and to park a Land Rover in his designated space. Unfortunately for him, the good times came to a crashing halt in 2014, after FBI agents linked Pierre’s computer-generated tax returns to EFINs obtained by his girlfriend and brother. Pierre is now serving a 2½-year sentence in a federal prison. Other defendants have received or are facing similar consequences in the federal court system.

Compounding the problem, the IRS currently has little to no oversight authority over EFINs. John Koskinen, the Service’s current commissioner, has urged Congress to approve legislation giving the agency more authority to set tougher competency standards for EFIN recipients. In the meantime, IRS criminal investigators are working closely with the FBI and U.S. Attorney’s Office to identify and arrest shady operators in South Florida. By mid-2014, according to authorities, they revoked 117 EFINs that had been used to file over 166,000 fraudulent refund claims. We should expect this heightened scrutiny to continue, and further arrests to be announced in the future, as the crackdown on fraudulent EFIN use gains steam in South Florida and nationwide.

If You Think You May Need A Lawyer, You Do. Call NOW!!

Do you need help in a financial or tax fraud case—or in any other criminal matter? Are you looking for a skilled attorney who can help defend your rights in federal or Florida state court?

If you think you may need a lawyer, you do. Please contact Attorney Tony Moss at the Tony Moss Firm, L.L.C. to discuss any defense matters. He has locations in Miami and Fort Lauderdale and is prepared to put his 27 years of expertise to work for you.

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